Saturday, 15 June 2013

bRIT FINANCIAL PAPER WARS EUROPE THAT IT NEEDS TO RESPECT CHINA OR LOSE OUT

China is giving Europe a harsh lesson

[source]

From time to time a small coincidence throws up a salutary reminder of the new geopolitical constellation. This happened the other day when Xi Jinping travelled to the US for talks with Barack Obama and, simultaneously, Beijing fired a broadside at Brussels. For a European, it was a distinctly unsettling experience.

As the US and Chinese presidents strolled in the sunshine at the Sunnylands resort in Palm Springs, mapping out what Mr Xi calls a new type of “great power” relationship, the People’s Daily published a trenchant editorial underlining Beijing’s rather frostier view of Europe. The wary respect afforded by Mr Xi to the leader of what is still the world’s sole superpower was notably absent from the message sent to America’s transatlantic allies.

The editorial appeared under the pen name Zhong Sheng, which sounds much the same in Mandarin as “Voice of China”. The casus belli was a burgeoning trade dispute with the European Commission about China’s alleged dumping of solar panels. The sentiments, though, went beyond an expression of anger at Karel De Gucht, the EU trade commissioner.

The editorial reminded Europe of its fading power in a reordered world: “The change of the times and the shifts of power have failed to change the condescending attitude of some Europeans.” Translated: a declining continent should know its place. If not: “China doesn’t want a trade war, but trade protectionism cannot but trigger a counterattack.” In Beijing’s view there is no doubt as to who would win such a confrontation. To concentrate minds, it launched its own anti-dumping probe into imports of European wine.

Equally striking was the open acknowledgment of a divide-and-rule approach to the EU. The People’s Daily pointed out that Mr De Gucht’s proposed anti-dumping duties were opposed by most member countries. What it might have added is that this testified to the success of China’s strategy of applying intense pressure to individual governments.

In advance of the solar panel decision, China deployed an array of threats. And, hey presto, Germany’s Angela Merkel was at the top of the list of leaders ready to disown Mr De Gucht. A visit to Berlin by Chinese premier Li Keqiang could then go ahead as planned.

Beijing adopts the same muscular response to what it deems to be interference in its internal affairs. Last year Britain’s David Cameron met the Dalai Lama in London. The prime minister has since been frozen out by the Chinese leadership. His German and French counterparts, who are said to have given private “assurances” about future contact with the Tibetan spiritual leader, are free to drum up business in Beijing.

Given that they are unable to agree among themselves, I suppose it is a stretch to imagine Europeans might make common cause with the Americans. A proposed transatlantic trade and investment pact offers Europe an opportunity to avoid geopolitical irrelevance. But even before the starting gun has been officially fired, a pall has fallen over prospects for a deal. Europeans do not seem to understand they have by far the most to lose from failure.

I heard many objections to the TTIP the other day during the annual gathering in Venice of the Council for the United States and Italy. Most came from the EU side. Beyond calls for protection of this or that sector, I sensed a more visceral hostility. Why should proud Europeans bend their national and cultural preferences to the wishes of bossy Americans?

It is all too difficult, Europeans say of attempts to agree common regulatory standards or to accept mutual recognition of rules and norms in areas as diverse as pharmaceuticals, food hygiene and financial services. There are too many national and special interests at stake. That is before you get to French cultural exceptionalism or to arguments about data protection thrown up by recent revelations about the interception activities of the US National Security Agency.

What is missing from these disputes about genetically modified food, public procurement practices, cotton prices and the rest is sight of the bigger prize. Put together the TTIP talks with parallel negotiations for a Trans-Pacific Partnership and with a putative free-trade deal between Europe and Japan, and the story becomes one about the cohesion or otherwise of the world’s advanced democracies.

One way of looking at the planned patchwork of deals is as a plot to lock out China; and the aim certainly is to continue to set norms and standards for the global economy. Another view, though, is that if western nations want to preserve an open, liberal and inclusive trading system, they must at least agree among themselves. A multilateral deal would have been preferable but, as was evident during the failed Doha round, it is out of reach.

None of this is to suggest Europe should simply bow to US demands. There are plenty of areas where Washington will have to make painful concessions if a transatlantic accord is to be reached. There is no reason also why the two sides cannot agree to disagree on some of the most sensitive issues if there is substantive progress elsewhere.

Europe has most to lose. The US possesses the economic and military strength and the natural resources to go it alone as a self-sufficient superpower. Europe faces the choice between cohesion and irrelevance. It has more to fear from an assertive China than cause to resent the US. Europeans can only hope that policy makers recognise the harsh facts of geopolitical life and put fights about chlorinated chickens into some perspective.

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